With Diwali just around the corner, consumers are actively engaged in their festive shopping, and what’s particularly noteworthy is the remarkable surge in demand for premium durable products. Stores are buzzing with activity from sales staff showcasing high-end smartphones, large-screen TVs, and fully-automatic washing machines to eager customers. Many of these potential buyers are swiftly placing orders after watching the product demonstrations.
This rising demand for premium durable products can be attributed to stable urban demand, the desire to upgrade, and accessible financing options. Customers are keen on purchasing items that boast larger and superior features, such as frost-free refrigerators, 43-inch and above TVs, higher-capacity split air conditioners, and fully-automatic washing machines.
On the flip side, products falling under the mass category, like semi-automatic washing machines, single-door refrigerators, and window ACs, are witnessing a decline in sales due to sluggish rural demand. This decline can be attributed to unpredictable weather conditions and inflationary pressures, which have adversely impacted discretionary spending.
Kamal Nandi, Business Head and Executive Vice-President of Godrej Appliances, shared insights into this trend, stating, “Premium durable products are experiencing growth of around 25-30% this festive season compared to last year, while mass-market products are witnessing a decline of about 5-10%.”
According to a report by Crisil Ratings, the domestic consumer durables industry is expected to achieve revenue growth of 8-10% this fiscal year. This growth is driven by premiumization and consistent urban demand, following a robust volume-led recovery of 18% in the previous fiscal year after the pandemic.
Mohit Makhija, Senior Director at Crisil Ratings, explained the expected demand for premium appliances, which is set to play out in three ways: increased demand for appliances with smart technologies, a shift towards higher capacities, and the preference for efficient appliances that reduce operating costs.
Premium products such as air conditioners and televisions have witnessed the most significant impact from this trend, partly due to a residential real estate boom that has spurred demand for higher-end home appliances. People are seeking better home entertainment experiences, contributing to the sales of large-screen TVs with advanced technologies. For instance, TVs with features like Quantum dot Light Emitting Diode (QLED) technology and larger screen sizes (43 inches and above) have been exceptionally well-received.
Retailers have also reported higher-than-usual demand for air conditioners, with increased sales driven by slightly warmer weather across the country. Despite the earlier impact of unseasonal rains on air conditioners and refrigerators, demand for these products picked up in October.
Saif Khan, MD & CEO of BSH Home Appliances, noted that the demand for premium products has increased in metros and cities, with particular growth in the North East region of India. As the appreciation for high-quality appliances grows, the company is committed to meeting the increasing demand with top-tier products and services.
While there is strong demand for consumer durables and fashion items during the festive season, volume growth may not keep pace with value growth. However, the consumer sentiment has been very positive, with sales remaining robust even during the period of ‘shradh,’ when many Hindus traditionally abstain from luxury purchases.
The industry is gearing up with special offers, interest-free financing options, new product launches, and extensive marketing campaigns to attract customers and boost sales. The ongoing Cricket World Cup and the desire for better home entertainment experiences have played a significant role in driving demand for premium consumer durables during this festive season.
